A Review of the Nigerian Energy Industry

Marginal fields: Participants to pay N3m for pre-qualification

Marginal-fields05 December 2013, Lagos – Each interested participant in the upcoming marginal fields bid round is expected to pay about N3 million to be pre-qualified to participate. The amount is made up of $15,000 (N2.4 milion) for accessing the physical data for the respective fields; N300,000 for processing fee; and N200,000 for application forms.

Thereafter, bidders must show evidence of availability of funds from their respective banks for the fields bid for.

This is to avoid investors scouting for funds after winning the bids, thereby causing processing delays. Applications are to be submitted at the Department of Petroleum Resources, DPR, headquarters in Lagos or the London office of Nigerian National Petroleum Corporation, NNPC.

These were part of the guidelines handed down to participants, as DPR began the road show for the sale of 31 marginal oil fields, yesterday, in Lagos.

Other road shows are scheduled for today in Portharcourt, Rivers State, and then move on to Kaduna, on December 10, and finally Abuja, December 12. Last week, the Federal Government announced the take off of the second licensing round for marginal fields operators.

The Minister of Petroleum Resources, Mrs. Diezani Alison-Madueke, disclosed at a press conference that 16 of the fields are located onshore, while the remaining 15 were in the continental shelf.

Other guidelines DPR’s Director, Mr. George Osahon, who took prospective investors through the criteria and guidelines for participation, disclosed that some of the rules of the game from the first licensing round had changed.

The Director disclosed that for this round, it had abolished such criteria as Niger Delta representation, Federal Character, and registration of companies six months prior to application, as obtained in the first round.

Furthermore, he said that government would not force participants into forced alliances, as investors were now at liberty to choose their own partners to form consortia. Also, they can come together even a day before submitting their applications.

However, in forming consortia, the DPR boss said that “each member should not have more than 25 per cent equity and should have at least one experienced industry professional,” while 51 per cent is owned by Nigerians to encourage indigenous participation.

He explained that this was to guard against a situation whereby people bought marginal fields and just left them dormant, only to go about town telling people they owned oil fields.

He said government wanted companies that would be active, rather than those that will sit tight on the assets.

Stages of pre-qualification Osahon also disclosed that there would be four stages during the pre-qualification.

The stages are collation of applications, evaluation of submissions, evaluation of technical and commercial submissions, and evaluation of oral presentations.

He further explained that the oral presentation is to ensure that “in each consortia, there is someone who knows what the business is all about.”

He added that the industry regulator would not allow one person to do oral presentation for different consortia, saying that each presentation will last for 30 minutes.

Osahon stated that no company would be allowed more than three marginal fields, noting that owning a marginal field is no guarantee of winning in this round.

Evidence of funding With regard to evidence of funding, Osahon disclosed on the sidelines of the road show that international finance institutions such as Africa Finance Corporation, AFC, and Africa Development Bank, ADB, were members of the screening committee.

AFC and ADB will assist DPR to critically look at the claims of access to funding presented in each application and to determine any irregularities in the commercial quotations.

Antecedents Osahon told participants at the road show that pre-qualified applicants would be notified by electronic mails.

About 24 marginal fields were sold during the first marginal field round, and only eight of these have been brought to production more than 12 years after, contributing only about one percent to Nigeria’s total production of about two million barrels per day.
*Clara Nwachukwu & Onyegbadue Amamdi, Vanguard

In this article

Join the Conversation